International Business Machines Corp reported a bigger-than-expected drop in revenue for the first time in five quarters, hurt by weak demand in its technology services business.
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Shares of IBM, whose revenue has now fallen for 20 quarters in a row, were down 3.7 percent at $163.71 in trading after the bell on Tuesday.
The company said revenue fell 2.8 percent, to $18.16 billion in the quarter ended March 31 from $18.68 billion a year earlier.
Analyst on average were expecting revenue of $18.39 billion, according to Thomson Reuters I/B/E/S.
With demand for IBM's legacy hardware and software businesses stagnating, Chief Executive Ginni Rometty has been shifting the company towards areas such as cloud-based services, security software and data analytics.
Revenue from these "strategic imperatives," as IBM calls them, rose 12 percent in the first quarter to $7.8 billion. The business accounted for 42 percent of total revenue, compared to 37 percent last year.
The company's net income dropped to $1.75 billion, or $1.85 per share, from $2.01 billion, or $2.09 per share.
Excluding items, IBM earned $2.38 per share, beating analysts' average estimate of $2.35.
The company also said it expects adjusted earnings of at least $13.80 per share for fiscal 2017, reiterating a forecast it gave on Jan. 19.
Since then, the average analyst estimate for earnings per share has risen from $13.74 to $13.78.
Up to Tuesday's close, IBM's shares have risen about 2.5 percent in 2017, less than the roughly 4 percent rise in the blue chip Dow Jones Industrial Average.
(Reporting by Narottam Medhora in Bengaluru; Editing by Savio D'Souza)